I am sure most readers are familiar with Aesop’s fable about the shepherd boy who cried wolf. For anyone not familiar with the tale I asked Grok to help me out.
Let’s talk about Gold
I hate gold. In fact, in an investing context I hate all commodities and usually steer clear of the sector entirely. However, something is happening with gold. I don’t know what exactly, but something is happening and it might be important. There are some facts and there are some theories.
In dollar terms, gold is hovering around all-time highs and is seemingly on the brink of breaking through $3,000 per ounce. That is more than 50% higher than the last time I paid any attention to the gold price back in 2020/21. So what’s been happening?
Central banks, and especially China have been significant buyers of gold. I had assumed this was largely related to the new BRICS currency they are cheerleading and perhaps that is so. However, there also appears to be a major amount of physical gold being re-shored to America. There is a rumour that there is going to be a gold audit, perhaps as part of the Elon Musk DOGE initiative. There are even suggestions that the Bank of England is defaulting on settlements as it cannot deliver the physical gold that is owed, although the simpler explanation might be merely one of logistics.
Further, there is some speculation that the Trump administration will be looking to bring back some sort of gold standard to the US dollar, perhaps to devalue the dollar, inflate away America’s debts and/or secure the dollar’s status as the world’s reserve currency. But this is all conjecture until Trump plays his hand.
President Trump tends to bring a special kind of craziness to markets and frankly, to the world. Perhaps that alone is a good enough reason to own gold. But whatever the reason, owning gold seems like a prudent step at the moment. The noise to signal ratio is extremely high. Sure, the gold bulls might be crying wolf but also, Trump might actually be about to destroy the fiat money village in order to rebuild it in his own image.
At this point I should disclose that I bought some gold exposure this week in the form of The Royal Mint backed physical gold ETC (RMAP). I’ve also bought some popcorn, even though I usually dislike horror movies!
Until next time,
Safe investing
Simon
Further Reading/Listening
A User’s Guide to Restructuring the Global Trading System
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